Under the Financing Contingency paragraph of the FloridaRealtors/FloridaBar-1 Contract and As-Is Contract (hereinafter collectively referred to as “Contract”), when can the Buyer or Seller terminate the Contract and is the deposit returned to Buyer?

  • Prior to Loan Commitment Date, Buyer notifies Seller in writing that Buyer can’t obtain financing after using diligence and good faith, Buyer gets Deposit back.
  • Prior to Loan Commitment Date, Buyer hasn’t notified Seller whether Buyer has obtained financing, and Seller wants to terminate the Contract.  Seller cannot terminate the Contract prior to the expiration of the Loan Commitment Date.
  • After Loan Commitment Date, Buyer notifies Seller in writing that Buyer can’t obtain financing after using diligence and good faith and is terminating the Contract, Buyer gets the Deposit back and Contract is terminated.
  • After Loan Commitment Date, Buyer has not delivered the Loan Commitment to the Seller, nor waived the Financing Contingency, and Seller notifies Buyer that Seller is terminating the Contract.  The Contract is terminated and the Deposit is returned to Buyer regardless if Buyer has obtained the Loan Commitment.  After the Loan Commitment Date, Seller has a right to terminate the Contract until Buyer delivers written notice to Seller of Buyer’s receipt of Loan Commitment or Buyer’s waiver of the financing contingency.
  • On Closing Date, Buyer notifies Seller in writing that Buyer can’t obtain financing after using diligence and good faith, Buyer gets the Deposit back and Contract is terminated.
  • On Closing Date, Buyer has obtained a Loan Commitment.  Buyer notifies Seller that Buyer is terminating the Contract under the Financing Contingency, Buyer does not get the Deposit back.  Buyer may only terminate the Contract under the Financing Contingency if Buyer does not receive the Loan Commitment.

Therefore, we have the following recommendations when representing the following respective parties:

  1. When representing a Buyer, you should request an extension of the Loan Commitment Date from the Seller to prevent the Seller from terminating the Contract while your Buyer is diligently pursuing financing.  If Seller will not grant the extension, then Buyer has three (3) choices: (i) continue trying to obtain financing but understanding that the Seller could terminate the Contract at anytime prior to Buyer delivering written notice of Buyer’s receipt of the Loan Commitment; (ii) terminate the Contract; or (iii) waive the financing contingency by notifying Seller in which event Buyer would not get the Deposit back if Buyer is unable to obtain financing or satisfy the Loan Commitment conditions by Closing.
  2. When representing a Seller, you should stay informed with regards to the Buyer’s financing status since the Contract requires the Buyer to keep the Seller and Broker fully informed and authorizes the Buyer’s Lender to disclose such status to Seller and Broker. If the Buyer does not notify Seller that Buyer has obtained financing by the expiration of the financing contingency, then the Seller should evaluate whether or not they wish to proceed with the Contract.


Berlin-Patten, PLLC

This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

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